The petrol-diesel conundrum



Barely a year ago, the difference in the price of a litre of petrol and diesel was at an all time high (Rs. 27.19) in favour of the latter.

Following the government’s decision to decontrol the prices of petrol, its cost had gone up by over 33% between July 2010 and 2012 (see graph). It however remained indecisive on diesel, which meant prices barely nudged 3%. This resulted in an almost immediate and dramatic impact on sales of cars and SUVs around the country. Entry level small car sales slipped in favour of bigger versions that had diesel options and SUVs. From barely 32% in July 2010, share of diesel vehicles in overall automobile sales in the country rose to over 50% by the first half of 2013.

Since then however, the cycle has been reversed. In less than one year, diesel prices have gone up by over 20% since July 2012 largely due to a phased price decontrol. Prices of petrol on the other hand have gone down by almost 8% in the same period as a result of the fall in international crude prices. The cost differential between the two fuels, now at Rs. 13.4 per litre, is at its lowest level in 3 years.

The impact of this on the ownership matrix of a diesel and petrol car spread over 5 years is dramatic. At July 2012 prices, you would have saved nearly Rs. 80,000 by opting for a diesel car if you drive on an average 60 kilometres a day or 22,000 kilometres a year. Today, that benefit has been cut to a meagre Rs. 2,500, which means the 10% higher maintenance cost of a diesel engine would make petrol cars a more attractive bet.

What does it mean for a prospective consumer? Should the market now ditch diesel for petrol?

Not entirely. A comparison between the respective running cost of a comparable petrol and diesel car would suggest that for somebody who travels over 70 kilometres a day, like in big cities and metros, diesel still makes more sense. However, it does not quite hold true in small tier II and III towns where the distances as also the affordability of cars is relatively less.

By nature, a diesel car is 20% more fuel efficient than a petrol car, and alongwith the cheaper fuel helps negate its higher cost (see table). At current prices, somebody who drives 60 kilometres a day will be able to break even save some money in a diesel car in 5 years. If you drive less per day, say 40 kilometres on an average, the break even time balloons to seven and a half years. Some other factors like cost of maintenance that tends to be higher on diesel vehicles also load the dice in favour of petrol cars.

The reversal in the pricing of the two fuels and its corresponding impact on the ownership matrix is finally being felt in the market. After a two year bull run, sale of diesel cars are at the cusp of a negative spiral while that of petrol cars is witnessing an uptick in demand.

There is speculation that prices of diesel are likely to go up further as the government undertakes its final few steps at a de-control. At the same time, there is a school of thought that the international crude oil prices is now at the low end of its cycle and will start going up soon. In effect, petrol will become dearer henceforth. The uncertainty over prices renders any such calculations that bets on the price differential between the two fuels to stay by and large at the same level, useless.

The best solution is…trust your instinct and follow your hunch. Nobody is a pundit in this game.

1 Star2 Stars3 Stars4 Stars5 Stars (5 votes, average: 3.6 out of 5)
Loading ... Loading ...
  • Anonymous

    Whoa…goin by ur description, brunch cover-page z surely gonna b a treat i guess!! N abt e-reader, i 2 feel d same….its no substitute for an actual book.. i enjoy putin my sign on d first page of each buk tat i buy ;) … N ya Advanced Happy Diwali!!!

    [Reply]

  • Anonymous

    zia my mate CALM DOWN , not so fast yeh, Holy Maccaroni , only a semblance of election in arab world and zia is already blowing the trumpet of Second Islamic Renaissance.The word renaissance means NEW LEARNING. That new learning in case of Islam ought to be, that ALL THAT IS WRITTEN IN QUORAN IS MOSTLY HOCUS POCUS , HADITH IS A MISOGYNIST VILE DOCUMENT BASED ON HEARSAY.
    THE NEW LEARNING SHOULD BE “HUMAN BEINGS ARE AT THE CENTRE OF ALL DISCOURSE AND NOT ISLAM OR ALLAH” as was the case in the TRUE RENAISSANCE

    [Reply]

    Anonymous Reply:

    Shan,
    Bang on target..I in fact see Arab world going back in 7th century where non-muslims will be hounded out by Islamists. There have been numerous attacks on christians in Egypt post so called Islamic renaissance.

    [Reply]

    Sibghat Khan2 Reply:

    This is not the renaissance of Christian who started crusade against Islam and Muslims all over the world and grabbed their nations ,continuously fought for two hundred years ,brutally killed looted their propirty. Islam taught to their Militia not to cut trees which bears fruits , not to kill old, disable ,infants and to those who does not wish to fight with you .Not to destroy worship places,that is why you will find Christian and Jews living peacefully in almost all the Midle East countries .All these three religion are monotheist and are branches of Ibrahimi religion who forbade to worship none except one God .A muslim is allowed to marry with Christian and Jewish girl . If you turn the pages of ancient history of India then you learn how Budhas Monestary were destroyed and entire population was chased away to other neighboring countries .Auregzeb has been called anti Hindu but he could not convert any but Sufi Hazrat chisti of Ajmer is revered by Hindus also . The Salook , common table and brotherhood brought lower strata Hindus in thousand in the fold of Islam .

    [Reply]

    Anonymous Reply:

    Dear Sibghat Khan,
    can you enlighten us Why there is no Christian and Jew in Arabian Peninsula, It was full of them at the time of Mohammed.All other Arab areas outside Arabian Penisula were populated entirely by Christians and Jews . There are some very small no. of them who have somehow survived.Mohammed had exhorted to his followers to clear whole Arab Peninsula of Jews and Christians, and they did it very faithfully.

    Destroying of places of worship started with Mohammed himself. Was Mecca muslim worship place?.Mohammed could have built another place of worship for himself.

    Please also enlighten us with reference where it is mentioned that Hindus destroyed Buddhist monasteries and chased away Buddhist people.No Buddhist has ever complained on this.
    Can you find any Hindu,Jain and Buddhist places of worship which is more than 400 years old (period upto which Muslims were in full power in above areas)from Afghanistan to Bengal, from Kashmir to Vindhyas.Any temple which would have survived would be either because of remote location or because of being very small/insignificant .
    You are totally brainwashed with this deranged cult philosphy which is called Islam.

    engrich Reply:

    can you enlighten us Why there is no Christian and Jew in Arabian Peninsula

    THERE ARE 1.5 CRORES CHRISTIANS IN ARAB WORLD.

    engrich Reply:

    Destroying of places of worship started with Mohammed himself

    PLACES OF WORSHIP ARE DESTROYED BY BRHMNS.NOT BY MUSLIMS.mecca is same so jerusalam.jews are destroying this.

    engrich Reply:

    Please also enlighten us with reference where it is mentioned that Hindus destroyed Buddhist monasteries and chased away Buddhist people.No Buddhist has ever complained on this

    aloke prayag kashi mathura and ayodhya were buhdhdist places of worship.brhmns never builted nything
    they decimated and exterminated budhhdists and jainese nd occupied their places of worship.

    Anonymous Reply:

    iGNORANCE IS THE HALLMARK OF MUSLIMS, and this geezer Khan is a living proof. Renaissance is only 500 yrs old , Crusade took place 1000 yrs ago BECAUSE MUSLIMS HAD OCCUPIED THE HOLY LAND THAT IS JERUSALEM.
    As for Muslim kindness , DOES THE NAME TAIMUR LUNG RING A BELL. How even a MULLAH TOOK PART IN SLAUGHTERING 100000 HINDUS IN DELHI.

    iSLAM IS GETTING ITS JUST DESERT FOR ALL THE SINS OF THE PAST CENTURIES

    engrich Reply:

    How even a MULLAH TOOK PART IN SLAUGHTERING 100000 HINDUS IN DELHI

    rubbish and shows ur ignorance about the subject.taimur killed most of the inhabitants of delhi which consisted mainly of muslims.

    engrich Reply:

    taimur was godless athiest though born in muslim family and hafiz quran.he conquered 68 countries in his life.he was great man.

    engrich Reply:

    THE NEW LEARNING SHOULD BE “HUMAN BEINGS ARE AT THE CENTRE OF ALL DISCOURSE AND NOT ISLAM OR ALLAH” as was the case in the TRUE RENAISSANCE

    rubbish billions were murdered after rennainance.not before.islam is based on highly moral principle.forgiveness is the supreme virtue of islam..during christaian rule in europe and america ,no other religion could survive ,while best church in europe and best temples in india were built under rule.

    most cruel and brutal wars in india took place durig vedic rule described i ramanaya geeta other holy scripture.entire orrisa was butchered by ashok before arrival of muslims.budhdhists and jainese were decmated and assimilated 2000 years before arrival of muslims.

    [Reply]

  • Abu Ahmed

    Yeah, that’s a historical victory, if for nothing else, at least for the process it took the ultras to understand that there is no way to turn the wheel backwards and go back in time. The tragedy is that it took so long for them to understand the meaning of tolerance that Islam itself preaches.

    [Reply]

  • Kumars1

    Zia mian, steady on. It is early days yet. The jury’s still out. Time will only tell. At best one can say a small step has been made. Saudi is the biggest roadblock.

    [Reply]

  • RajX

    Have people noticed how effortlessly Zia has turned the Arab spring which is a fight for political and ecconomic freedom into some redemption of Islam. I wonder what the christian Copts who formed a significant part of the Egyptian leaders of the protest would think of that?
    It appears that the seculars who actually lead the revolution and took the hit for it have been shoved aside by the people themselves who have preferred the Islamists to the seculars in the elections held so far n Tunisia and Egypt. That tells a lot about the mindset of these people who have lived in these types of societies where a lot religious brainwashing starts on every single one of them from a young age when they are not in a position to contradict anything which is being put in their mind.

    [Reply]

  • RajX

    “All the Islamist parties, including the Muslim Brotherhood, have demonstrated a strong will to reconcile Islam and modernity – a much delayed project.”

    The hypocrisy of Zia and his ilk are predictable. Promoting Islamist groups in Islamic countries where minority nonmuslims are persecuted while singing secularism and doing their atmost to destroy and arabize local culture when islamists are in the minority. It’s a sign of the times that HT has such a person writing for them. Will Zia will have such opinions as in the statement above if RSS decides to contest elections directly? Hahahaha..I don’t think so.

    [Reply]

  • engrich

    A US arms control expert has made the astonishing claim that Pakistan’s notorious nuclear engineer AQ Khan may have proliferated nuclear technology to India.

    The source of the article is as surprising as the assertion is fantastic. In a commentary in the adults magazine Playboy, Joshua Pollack, a US policy wonk who has done work on nuclear proliferation, says India may have been the secret, unnamed “fourth country” — after Iran, Libya and North Korea — to which AQ Khan “provided the shortcut to a nuclear weapon.”

    Pollack offers little credible evidence to back the contention, other than to point similarities between the centrifuges India uses in its uranium-enrichment program and Pakistan’s own centrifuges engineered by Khan. He also cites South African court documents claiming that a member of the so-called “Khan network” supplied India’s centrifuge program with specialized equipment (mainly flow meters), starting in the late 1980s.

    According to Pollack, although India went nuclear several years before Pakistan, it was done through the plutonium route (in 1972). But New Delhi’s ability to enrich uranium remained limited, and it was not until 1986 — by which time Pakistan had been churning out weapons-grade uranium for three years — that India was ready to break ground on its uranium-enrichment facility.

    [Reply]

  • engrich

    how to desroy and enslave a country,

    Bring false Accusations against Government
    Phase 2) Bomb country to rubble
    Phase 3) Install your own Government
    Phase 4) Loan the money for the “rebuilding” contract
    Phase 5) Win all the contracts
    Phase 6) Heavily in debt the country
    Phase 7) Impose SAP’s through the IMF
    Phase 8) Buy all national assets for pennies
    Phase 9) Send foreign “AID”
    Phase 10) Demand foreign “AID” procure only western products
    Phase 11) Convince the world the country failed because the people are uncivilized.

    anna is on stage.which takes some time other steps.other steps are bit faster.rss is sleeping cell of international zoinism.were caught at 53 places taking training with live ammunitions..after parliament session anytime game will start.

    [Reply]

  • http://www.facebook.com/rahulk211267 Rahul Karmakar

    Brillanto!

    [Reply]

  • http://twitter.com/jafsi Jafsi™♛

    Good one.. specially this line : ‘Was Mr Hefner looking for some extra shine
    in chosing a figure below the poverty line?’
    ROFL

    [Reply]

  • ajay

    true

    [Reply]